Category Archives: Sustainability

Sustainability 2008

The first Sourcing-Innovation sponsored cross-blog series of 2008 starts today – and the topic this time is sustainability. With the recent focus on corporate social responsibility, carbon footprint, the environment, green supply chain, and regulatory compliance, sustainability, in some way, shape, or form is on everybody’s minds – even if they can’t really define what it is. Thus, the doctor thinks it’s the perfect time to address this topic.

the doctor is also hoping that this cross-blog series builds on the success of previous cross-blog series, including:
The Future of Sourcing,
The Future of Sourcing II, and
The Top Three
and becomes the most successful cross-blog series yet. (All of your favorite bloggers, guest-bloggers, and analysts were given one month’s notice, so hopefully they had enough time to prepare! Furthermore, this series runs for two weeks, so even if the doctor missed someone in his invites, or their corporate e-mail server ate the message, they still have time to chime in.)

In addition to giving you great advice on how to be more sustainable, the doctor is hoping that some of the more innovative bloggers will provide us with a better definition of what sustainability really is. If you look at C.J. Abraham’s “brief background on sustainability issues”, you’ll notice that there’s quite a few definitions out there on what sustainable is, each with a different breadth and depth of focus. Some sound pretty good to the doctor, but others seem to miss the point.

It’s a tough topic. If you look at just the topics covered in the John Lewis Partnership’s “Responsible Sourcing Supplier Workbook” that was designed to enable sustainable supplier business practices that was covered herein last year (see the JLP category), it alone talked about child labour, forced labour, health & safety, discipline, freedom of association, working hours, equality of treatment, wages, regular employment, and the environment. However, we’ve also talked about carbon foot print, regulatory compliance, waste reduction, SaaS, design for recycling, security, and a host of other topics with respect to sustainability here on this blog.

So be sure to check back regularly as the doctor will be indexing and covering the posts as they hit the blogsphere on a regular basis.

To sustainability!

the doctor Gives You A Very Important Reason to Go SaaS

Those of you who read the On-Demand / Software as a Service Application Platforms wiki-paper on the e-Sourcing Wiki [WayBackMachine], already have fifteen (15) great reasons to go SaaS, which include:

  • Pay As You Go
  • Instant Deployment
  • Single Instance
  • Economies of Scale
  • Provider Handles Administration, Maintenance, and IT Headaches
  • Free Upgrades
  • The Customer Has the Leverage
  • Anywhere Access
  • Buy What Is Needed, And Only What Is Needed
  • Single, Accountable Entity
  • Regular, Automated Data Backup
  • Built for Change
  • Unparalleled Collaborative Capabilities
  • Integration with Office Applications
  • Low Total Cost of Ownership

However, perhaps the biggest reason you should go SaaS, is:

  • Sustainability

Reading the article “Analyzing Costs and Benefits”, I was reminded just how fast energy costs are rising (much faster than the referenced rate from the Energy Information Administration) and how much savings there is to be had just by reducing your energy needs.

And if you maintain all of your systems in house, then, unless you are manufacturer, one of your biggest energy needs is your IT data center – especially since you probably can’t afford to be updating all of your hardware every other year (like many modern data centers do). If you maintain PC-based servers for 4 (or 5 years), and mini-computers / racks for that long or longer, than your hardware needs are probably three or four times what they would be if everything was running on latest technology with real-time load-balancing and virtualization. Furthermore, chances are each of these machines is requiring at least twice as much energy to run as a modern machine with a lower power utilization processor and much better energy conservation technology. All in all, you’re probably consuming at least eight times as much energy as you need to be, especially when compared to an up-to-date data center used by a SaaS provider.

Furthermore, not only are you allowing for significant energy savings by using SaaS, but you’re also contributing to green in a big way, because the hardware resources of a SaaS provider are shared between multiple organizations. This not only allows for even more efficient resource utilization, but also reduces the amount of hardware, and thus the amount of future electronic waste, that will need to be recycled.

Now That Your Marketing Budget Has Been Approved

It would be a very good time to send the doctor an e-mail to reserve your slot as a sponsor of Sourcing Innovation. As one of the few resources for sourcing, procurement, purchasing, supply and spend management professionals interested in improving themselves, their processes, and the overall performance of their organizations, and possibly the only blog in the space whose primary goal is reader education, Sourcing Innovation is uniquely positioned to give you the brand boost and visibility you need with the audience that counts. (After all, who is more likely to influence important technology and service buying decisions at their companies – the lazy gossip seekers or, as Brain would put it, the “chaff”, or the driven knowledge-seeking professionals anxious to advance their skills and careers who, as Brain would also put it, are the “wheat” of their organization?)

More information about Sourcing Innovation can be found in the About post, always accessible from the right-hand sidebar. More information about where your market is going, the SI Open Pricing Model, and why you’re going to sponsor Sourcing Innovation is available in the sponsorship section.

If you have questions, or you would like more information, please feel free to e-mail the doctor <at> sourcinginnovation <dot> com at your convenience.

AT Kearney’s Sustainable Supply Chain

Last month, the Supply Chain Management Review published “The Sustainable Supply Chain” by Daniel Mahler that was based upon a joint study to assess corporate sustainability practices by A.T. Kearney and the Institute for Supply Management. The study found that sustainability efforts have started in a number of firms, and that it appears that a growing number of companies have started to put in place specific, comprehensive sustainability strategies for internal operations and external relationships. However, this also means that a number of firms have not yet embraced sustainability.

The article notes that it’s time for “wave two” sustainability – for companies to move beyond simply saying what’s right to doing what’s right and make sustainability happen – and I have to agree. Especially since the process of moving to sustainability, at a high level, isn’t that hard. It’s just like every other initiative and can be summarized as per the article:

  • Devise a Sustainable Strategy
    This will require a lot of research, rolling up the sleeves, and putting in the hours to get it done – but considering that 36% of firms surveyed have a formal sustainability strategy for managing their supply chains, it’s obviously doable.
  • Retool the Organization
    The study found that more than one-half of companies evaluate supply management executives against some sustainability standards. For sustainability to be taken seriously, everyone should be measured against it. We need 100% of companies adopting standards and making sustainability a priority.
  • Manage Supplier Relations
    Your supply chain isn’t sustainable unless it’s sustainable end-to-end. You need to make sure your suppliers also institute sustainable practices, and work with them if they need help.

The article also offered up some guidelines for going forward that weren’t too bad. In summary:

  • Survey the Strategic Context
    Start by understanding your economic, environmental, and social priorities.
  • Understand Risks and Opportunities
    A primary goal of your strategy should be to limit the exposure of your supply chain to social and environmental risks as well as future supply-demand imbalances.
  • Get Ready.
    Update your strategy, processes, and operations as required.
  • Set Priorities.
    Set formal priorities for implementing plans based on ease of implementation and expected value. Make sure the targets are measurable and visible!
  • Go!
    Just Do It!

Remember, sustainability is not only a chance to contribute to societal good, but also a powerful source of competitive advantage in the burgeoning environmentally-conscious economy.

Supply Management in the Decade Ahead V: Missions, Goals, & Performance Expectations

In Part I of our review of “Succeeding in a Dynamic World: Supply Management in the Decade Ahead”, we overviewed the various external forces that will impact a company’s supply chain. In Parts II and III we took deep dives into the eight major forces that were identified specifically by supply managers who took part in the survey. In Part IV we focussed on some of the major impacts to business models and strategies in the decade ahead. In this post, we will address the new and expanded missions, goals, and performance expectations for supply management as identified by the report.

The report notes that chief executives will ask far more of supply management – requiring it to take on a broader, more strategic mission, evaluating it on a more comprehensive set of goals and expecting a higher level of performance. To accomplish this, supply management will need to expand its influence across functions, business units and geographies, go beyond the comfort zone of traditional success measures, and find creative ways to deliver even more value to the corporation.

The report than indicates that tomorrow’s missions, goals, and performance expectations for supply management will fall into four main areas:

  • Delivering More Innovation From Suppliers
    The need for innovation will accelerate as companies continue to pursue new geographic and demographic markets. With the demand and supply for innovation destined to be in a constant state of flux through the coming decade, and with the limited resources that will be available within any single company (thanks to the talent crunch), business will need to overcome the usual “not invented here” barriers and tap into all available sources of innovation on a global scale.
    Companies will have to develop advanced approaches to how they identify external sources of supply, how they structure the commercial and working relationships with those sources, and how they make those resources an integral part of the product and services development process. Reinvention of the innovation model will be required to fully leverage external sources – and companies will need to formalize an ongoing process for sourcing innovation.
  • Contributing More Broadly To Revenue Generation
    Close attention to costs for goods and services leads to more competitively priced end products while a focus on quality and service reduces failure rates, improves availability, and leads to higher customer satisfaction and loyalty. However, some companies will expect even more. Some will seek to boost revenue by rapidly introducing products with a limited life-cycle to smaller, niche, markets. Other companies will seek to leverage the existing asset base and distribution channels to bring to market higher value or radically different products. Others still will ask supply management to take a lead role in finding new revenue streams using their unique knowledge of the business. And some will ask supply management to assist sales in co-selling products and services in one channel to suppliers of another channel.
    In the first case, supply management will need to find suppliers and create processes that support entering and exiting these unique offerings quickly with speed, agility, and minimal waste. In the second case, supply management will need to develop or restructure the supply case to meet the needs and costs of the markets into which the company wants to sell. In the third case, supply management will need to assess, screen, and take a lead role in negotiating with the relevant external parties. In the last case, supply management will need to provide deep insights into the dynamics of upstream supply markets.
  • Anticipating And Managing Supply Risk
    Extended global supply chains that include geographically distant, unproven, and even unknown suppliers pose supply continuity, liability, reputational, and intellectual property risks. Changes in buyer-supplier market dynamics reduces predictability. Actions related to environmental protection, sustainability, and labor practices pose uncertainty. The volatility of commodity prices, currencies, interest rates, and even tax structures adds additional complexity. Risk is everywhere!
    Supply management executives will be epxected to play a more strategic role in identifying and interpreting risks, and making tough decisions about risk exposure and mitigation. The level of sophistication required to manage the complex, wide-ranging portfolio of supply risks and integrate risk management into overall supply activities will need to increase.
  • Expanding the Breadth And Impact of Cost Management Efforts
    Performance expectations will be raised considerably as global competition forces companies to squeeze unnecessary cost out of every part of their business. For supply management, this will mean widening the breadth of spend areas covered, managing costs more holistically, and delivering cost savings faster. A range of tools and techniques will be used, including complexity reduction, greater standardization, tighter management of specifications and demand, compliance management, target costing, value analysis, value engineering, price benchmarking, statistical price modeling, should-cost analysis, expressive bidding, lean design, and Six Sigma.

Cost Management, Revenue Management, Risk Management, and Innovation management covers a lot of the bases, but I’d add at least the following:

  • Supplier Management
    Suppliers are going to become more critical to your operations as a whole – and this is going to require better management of not only their performance, but your overall relationships – as well as all of the data you collect about them, their products, and their operations. This will involve implementing and utilizing the next generation of SRM (Supplier Relationship Management), SPM (Supplier Performance Management), and SIM (Supplier Information Management) technology, which will eventually be unified in a common platform.
  • Sustainability Management
    Sustainability is the word on everyone’s lips these days and sustainability from social, environmental, and business perspectives will be critical. It will cease to be a secondary concern to cost, revenue, and risk management and many of tomorrow’s strategies will be designed with sustainability as the key priority.
  • Talent Management
    In a knowledge economy, talent is key. As talent becomes scarce, HR will be looking to supply management to help them identify available sources of talent within the supply chain to meet the organization’s needs via outsourcing, insourcing, and new types of talent sharing agreements between organizations, third parties, independent consultants, and semi-retired individuals.

After a break, this series will return with Parts VI through XII that will cover each of the seven critical supply strategies for succeeding in a dynamic world that were identified by the report.